Swine Flu Profits

Colin asks, “Why the hype over 740 swine flu deaths when the annual average of normal flu deaths is over 500,000?”

By Andrew Jack in London

Published: July 20 2009 19:40 | Last updated: July 20 2009 23:43

Some of the world’s leading pharmaceutical companies are reaping billions of dollars in extra revenue amid global concern about the spread of swine flu.

Analysts expect to see a boost in sales from GlaxoSmithKline, Roche and Sanofi-Aventis when the companies report first-half earnings lifted by government contracts for flu vaccines and antiviral medicines.

The fresh sales – on top of strong results from Novartis of Switzerland and Baxter of the US, which both also produce vaccines – come as the latest tallies show that more than 740 people have died from the H1N1 virus, and millions have been affected around the world.

GlaxoSmithKline of the UK confirmed it had sold 150m doses of a pandemic flu vaccine – equivalent to its normal sales of seasonal flu vaccine – to countries including the UK, the US, France and Belgium, and was gearing up to boost production.

GSK also produces Relenza, an antiviral medicine that reduces the length and severity of the infection, and is preparing to increase manufacturing towards 60m annual doses. The UK placed an order for 10m treatments this year.

One beneficiary of the fears about the pandemic has been Roche of Switzerland, which sells Tamiflu, the leading antiviral drug, and has seen a sharp rise in orders from private companies as well as governments.

A report last week from JPMorgan, the investment bank, estimated that governments had ordered nearly 600m doses of pandemic vaccine and adjuvant – a chemical that boosts its efficacy – worth $4.3bn (€3bn, £2.6bn) in sales, and there was potential for 342m more doses worth $2.6bn.

It forecast that fresh antiviral sales could boost sales for GSK and Roche by another $1.8bn in the developed world, and potentially up to $1.2bn from the developing world.

But there were also uncertainties for the pharmaceutical manufacturers. With demand likely to outstrip supply, and initial production suggesting that the yield for the pandemic vaccine is relatively low, they may face difficult choices in determining how much to supply to the countries seeking orders.

They are also under pressure to provide more drugs and vaccines for free, or extremely cheaply, to the developing world.